By Jacob Wolinsky. Originally published at ValueWalk.
Non Farm Payroll reaction – a bit of a consuming but generally negative picture – The unemployment rate in the United States declined by 0.3 percent to 4.7 percent in May. Non Farm Payroll employment increased by 38,000.O
JPMorgan opines:
obviously this is a huge miss vs. the St 160K. Even if you add back ~35K to adjust for Verizon, that number is only ~73K (still a big miss). Also there was a large downward revision to the Apr number (from +160K to +123K). Most had assumed the job addition pace was slowing from the 200K+ pace of the last several months but only to ~140-160K (not sub 100K). The UR ticked down from 4.9% to 4.7% although for the “wrong” reasons as the participation rate declined from 62.8% to 62.6%. Wages were inline at +0.2% M/M and +2.5% Y/Y (and the Apr wage figure was revised up from +0.3% to +0.4%). Hours were a touch light at 34.4 (vs. the St 34.5). Overall this is obviously a “bad” number and points to labor weakness but note that it doesn’t comport w/other jobs indicators (claims, ADP, ISMs, etc) and w/all the Verizon noise some investors may decide to “fade” the 38K.
Meanwhile UBS states:
Despite weak job gains average hourly earnings rose by 0.2% m/m and held at 2.5% y/y. Along with a steady (albeit downward-revised) workweek, this does offer a small silver lining to an otherwise lackluster report.
We continue to expect the Fed to hike rates two times this year.
Garman had predicted:
Our guess then for today’s non-farm payrolls… which we offer up as a two year old child might proudly bring his mother a well-made mud-pie… is for 125,000. We shall, however, consider anything between 110-210 thousand as a bulls-eye, widening our bulls-eye range from the usual 40-50 thousand to 100 thousand, courtesy of Verizon.
As for the unemployment rate, it was 5.0% last month; it should be 4.9% this month, but at worst it shall hold steady at 5.0%. Average hourly earnings last month rose 0.3%; this month they should rise 0.2%. Last month, the average hours worked number was 34.5; this month it could be marginally lower and we should not be surprised if it falls to 34.4… again, “courtesy” of Verizon. Again, be careful out there. Surprises lurk everywhere… maybe!
SocGen had noted:
couple of special factors probably put a dent in the headline payrolls gain in May, although the underlying data will likely point to continued tightening in the labour market. First, the recently settled strike at Verizon will subtract around 35,000 workers from the payrolls tally. Second, we look for a sharp cooling in payrolls in the “management, technical consulting” sector. This industry added a whopping 21,000 workers to the April result but a reading more in line with the recent trend will take away from the headline figure. Excluding the Verizon strike, payrolls probably rose by 175,000, a solid, if unspectacular, result. Average hourly earnings should post a decent 0.2% gain, leaving the yoy rate at 2.5%
See the following visualizations which highlight the unemployment rate and jobs added in May, as well as a number of other economic indicators.
Non Farm Payroll
National Unemployment Rate
Jobs Added/Lost in the United States
Unemployment Rate & Jobs Added/Lost in the US
US Unemployment Rate vs Labor Force Participation Rate
Non Farm Payroll – Average Hourly Earnings in the United States
The post Non Farm Payrolls Disappoint – Bad Numbers Or Confusing? appeared first on ValueWalk.
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